MUMBAI: Axis Bank is entering fiscal year 2026–27 (FY27) with a sharply conservative stance, setting aside a one-time ₹2,001 crore buffer in the March quarter (Q4FY26) to shield its balance sheet from potential shocks stemming from geopolitical and macro uncertainty, including the ongoing .
The additional provision, part of a voluntary enhancement of its provisioning framework for standard assets, is intended as a precautionary buffer rather than a response to any deterioration in asset quality, management said on Saturday following the bank’s Q4 results.
“Based on an assessment of evolving and unpredictable macro and geopolitical uncertainties, the bank created an additional one-time provision…This action is prudent and precautionary in nature and does not reflect deterioration in asset quality,” chief financial officer Puneet Sharma said in the bank’s Q4 earnings call.
’s internal stress tests underpin the move, factoring in a severe adverse scenario that includes crude oil prices averaging above $150 per barrel for a year, inflation at 7.4%, and a 20% currency depreciation. Under such conditions, the bank believes it has already built sufficient buffers.
“…Based on some of these test scenarios, we look at which are the accounts which could go into NPL (non-performing loans) and what our credit cost could be and based on that this number is right. These assumptions are not based on what we see today, managing director and chief executive officer Amitabh Chaudhry said, adding that the buffer could be written back if risks recede.
Higher provisioning weighed on profitability during the March quarter. Provision and contingencies rose to ₹3,522 crore, more than doubling from a year earlier, including ₹1,146 crore of specific loan loss provisions. Net profit slipped 0.6% year-on-year to ₹7,071 crore, though it rose 6% sequentially.
While the bank refrained from offering near-term guidance on credit and deposit growth, it outlined a medium-term ambition.
“We will endeavour to grow faster than industry on a fiscal year basis, and we will gain 300 basis points higher than industry growth over the medium term, which is a 3 to 5 year horizon for us,” Sharma said. During the three months through 31 March, Axis Bank’s loan book rose 19% year-on-year to ₹12.33 trillion, while deposits grew 14% to ₹13.35 trillion.
Net interest income rose 5% year-on-year to ₹14,457 crore, while net interest margin edged down to 3.62% from 3.64% in the October-December quarter.
Executive director Subrat Mohanty flagged near-term pressure on margins but reiterated the bank’s through-cycle target.
“Our through-cycle guidance continues to remain at 3.80%… we still believe that optimizing for net interest income is a sound strategy,” he said, adding that rate cuts take time to fully transmit. In December, the Reserve Bank of India had cut the by 25 basis points.